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Readers write to say it's time to raise questions about accounting oversight; companies are still reluctant to integrate approaches to governance, risk and compliance; and Europe is finally warming to incentive-compensation management software.
CFO Readers, CFO Europe Magazine
October 1, 2007
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"Five Years and Accounting" (July/August 2007) was right to note that many issues "remain far from settled."
It is time to raise serious questions. The concerns of Sarbanes and Oxley were legitimate. Some changes were needed. However, questions persist and are reflected in the continuing discontent, as you illustrate so well. The architecture of the implementation is yet to be optimally designed and it is not clear that the implementation promotes "accountability on many levels."
Is the [US's] Public Company Accounting Oversight Board needed, or is it a redundant body? Should auditing standard-setting be transferred back to the Accounting Standards Board, which is involved in serious, good-faith participation in global efforts to establish a single set of auditing standards? Should the oversight function be moved to the Securities and Exchange Commission? Indeed, a small staff of auditors, who would have full access to the inspection reports of public accounting firms auditing publicly owned entities, could provide a valuable analysis and research service in monitoring weaknesses in standards, problems with implementation, and so on. This group of auditors would be at the SEC too.
Mary Ellen Oliverio
Professor of Accounting, Pace University
I agree that the big issue around GRC (governance, risk and compliance) software is "whether the integration it claims to bring about is something companies will want to embark on," as "One for Three" (September 2007) states. Over the past decade, the proportion of corporate spending allocated to compliance activity has soared, but companies still seem reluctant to create an efficient approach to the disciplines of governance, risk and compliance.
Piecemeal policies for addressing individual regulations or requirements are resulting in duplication, confusion and wasted resources. This is creating a compliance burden that is in danger of undermining profitability and constraining innovation and development.
Over the past decade, various organisations have invested heavily in setting standards for risk management and compliance that are designed to minimise corporate risk. Yet, in too many cases, companies cannot implement these standards due to a lack of accurate, up-to-date information.
There is growing acceptance that, with little or no co-operation between those responsible for governance, risk and compliance, companies are missing a huge opportunity to drive down the cost of implementing standards. Providing an effective framework for collecting information and then using that information to support pro-active risk management for all parts of a company is the only way to solve the problem.
Managing Director, Information Governance
I read "The Onus of Bonus" (July/August 2007) with interest. Over the past five years, incentive-compensation management (ICM) software has been gaining a strong foothold in corporate Europe. Undoubtedly there has been pain, but for the most part this is confined to stakeholder buy-in, the purported complexity of automating commission plans and a perceived need to redesign the entire IT infrastructure. However the ROI, proven change in sales behaviour and increased sales volume that companies have experienced within a relatively short time of implementing ICM software, have all presented a compelling argument for it.
Nevertheless, it has perhaps been a hidden gem in the jewel box of forward-thinking competitive companies. But if we start talking about the results that can be achieved, I doubt ICM software will remain the preserve of this small number of companies.
Managing Director, Practique Associates